A high share of foreign currency denomination of domestic public debt in rules out any recourse to inflation tax as an effective adjustment device. Anti- inflation policies based upon hard peg regimes may remove the exchange rate risk in the short run but - as pointed out by Argentina’s currency board crisis at the beginning of the current decade - cannot avoid the default risk, mirrored in the spread between yields on domestic bonds and benchmark bonds such as US Treasury Bills. Alternatively, for any degree of fiscal discipline, adjustable peg or freely floating exchange rate regimes may be successful only if the passthrough from a depreciating exchange to domestic prices and wages is kept under control. Temporary and well targeted controls on short-term external capital movements, such as those successfully managed by Chile and Malaysia, may help to overcome the most acute phase of crisis adjustment. Debt- for-equity swaps and their variants such as debt- for-development or debt- for-nature swaps, involving both public and private lenders, may give an effective although quite limited support to adjustment policies in over- indebted developing countries. strategies and oligopolistic rivalry.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by CESPRI, Centre for Research on Innovation and Internationalisation, Universita' Bocconi, Milano, Italy in its series CESPRI Working Papers with number
157.
Length: 35 pages Date of creation: Jul 2004 Date of revision:
Jul 2004 Handle: RePEc:cri:cespri:wp157
Contact details of provider: Postal: via Sarfatti, 25 - 20136 Milano - Italy Phone: +39.025836.3397 Fax: +39.025836.3399 Web page: http://www.cespri.unibocconi.it/
Order Information: Postal: E G E A - via R. Sarfatti, 25 - 20136 Milano -Italy
For technical questions regarding this item, or to correct its listing, contact: (Roberta Ometti).
Find related papers by JEL classification: F34 - International Economics - - International Finance - - - International Lending and Debt Problems F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.: